Global advisory, broking and solutions company Willis Towers Watson announced today the publication of ‘Diversity in the Asset Management Industry,’ outlining the firm’s updated methodology for assessing and encouraging diversity within asset managers, investment consultants, and asset owners. Along with the publication, Willis Towers Watson also announced initiatives to increase the diversity of managers for its own clients’ portfolios.
According to Willis Towers Watson, its research has found that progress on diversity across the whole investment industry remains disappointingly slow, and even producing data on diversity and inclusion in the investment industry is difficult. The firm stated that examining the data reported to a third-party database provider comprising over 6,000 firms, only about a quarter of the firms provided ownership details, making screening by diverse ownership challenging. Nevertheless, the firm believes that diversity leads to better decision-making and ultimately better investment outcomes.
The new diversity approach set out by Willis Towers Watson goes beyond reliance on a single metric, such as minority or female ownership, and instead uses a new more broadly-based Diversity Score to establish a baseline view on gender and ethnic diversity, supplemented with the more nuanced aspects of diversity gleaned through its qualitative manager research process.
In its own clients’ portfolios, Willis Towers Watson announced that it has also launched initiatives to encourage the use of a more diverse set of asset managers. The firm stated that its manager research team is targeting an increase of 20% in discovery meetings, and that it expects to increaser allocations to diverse investment teams within its delegated portfolios. In addition, the company warned that asset managers who fail to encourage greater diversity or do not respond to growing asset owner expectations, may face a downgrading of their rating.
Chris Redmond, Head of Manager Research at Willis Towers Watson, said:
“Addressing the systemic issue of poor diversity in the asset management industry requires a collective effort, and in many cases a fundamental change in mindset and culture. Although some of these efforts will take time to bear fruit, as an industry we need to be challenging ourselves to do more now.
“Improving diversity is key to building a stronger investment industry, and our initial findings show that it is positively linked to performance outcomes. We recognise that businesses are at different points in their diversity journey today, and these proposed actions are just the starting point upon which the industry can build. While we recognise the challenges that lie ahead, we strongly believe that by taking these steps, the investment industry can take a crucial leap forward in better reflecting our society and delivering better performance outcomes for savers.”